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Tiger Beer
Joined: 07 Feb 2003
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 Posted: Fri Jul 17, 2009 5:52 pm Post subject: |
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| lithium wrote: |
| Remember that the majority of the Bush era was filled with an economic boom. Unemplyment was in the low single digits and we successfully rallied back from the terrorists attacks. Saying that we had 8 years of declination is far from correct. |
The economic boom was ACTUALLY Bush encouraging the Feds to make interest rates to the lowest ever in history for a prolonged time...with the general rule that 'every American should own a house'...leaving out the 'over at massively inflated prices' part that is going to blow up in everyone's face down the road.
The entire housing debacle WAS the BOOM. Speculators, real estate agents, house flippers, banks, and everyone else WAS IT. People were employed in construction across the country, they couldn't build houses fast enough, as everyone was getting half a million dollars loans to buy and re-sell and flip again and again.
Selling tiny little houses for 400,000 and selling for 420,000...all due to massively easy bank loans at 1% is what was stimulating the economy.
That was it.
So, yes, there WAS something that was happening in Bush's administration...but it was a disaster thing to encourage, and resulted in something completely unstable. We are MUCH worse off because of it. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Jul 17, 2009 5:56 pm Post subject: |
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| I agree. Though I don't know how much Bush actually pushed Greenspan to lower rates. That was solidly in line with the prevailing macroeconomic dogma of the time (Krugman advocated for it for the specific reason of blowing a housing bubble, for example). |
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Tiger Beer
Joined: 07 Feb 2003
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| Posted: Fri Jul 17, 2009 6:12 pm Post subject: |
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Bush speaking in 2004 about housing...(I just quickly got this off the internet, but I recall MANY of his speeches at that time were related):
http://www.msnbc.msn.com/id/4568925/
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In a swing through the Southwest on Friday, the president highlighted three of his economic policies he said can help nearly 400,000 low- or moderate-income families become home buyers.
One of the approaches, the American Dream Down Payment Act, will help low-income Americans afford the down payment and closing costs on their first home. Bush is asking Congress to provide $200 million a year for the program. He also proposes to make zero down-payment loans available to first-time buyers whose mortgages are guaranteed by the Federal Housing Administration.
In addition, Bush is proposing a tax credit to encourage builders to provide 200,000 affordable homes over five years for low-income families.
These and other steps, he said, will push the nation toward his goal of adding 5.5 million new minority home owners by the end of the decade. |
Here is youtube speech in 2002:
http://www.youtube.com/watch?v=eW9viaJatpo
It was a VERY repetitive theme of the Bush administration. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Jul 17, 2009 6:29 pm Post subject: |
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| Oh, no doubt. The administration clearly wanted more home "ownership" for a variety of reasons - each more nefarious than the last. But without the low Fed rate (between 1-1.7 for 33 months) it wouldn't have been possible. That's my only point. I was no fan of Bush. But this is on Greenspan. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Sat Jul 18, 2009 3:37 am Post subject: |
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| mises wrote: |
| I agree. Though I don't know how much Bush actually pushed Greenspan to lower rates. That was solidly in line with the prevailing macroeconomic dogma of the time (Krugman advocated for it for the specific reason of blowing a housing bubble, for example). |
The Krugman quotes you provided were all from 2001 and they all advocated steps to get out of the recession, not while it was booming. The Fed could have cooled and contracted the bubble.
With regards to 'marginal productivity of debt' I'm rather skeptical. Mainly because googling only brings up the single article, real figures aren't available and Fekete doesn't detail how it's calculated. His Wikipedia entry is also rather suspect.
Back to the OP: quite simply we should judge the stimulus at least when a majority of it has been implemented. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Jul 18, 2009 6:26 am Post subject: |
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| The Krugman quotes you provided were all from 2001 and they all advocated steps to get out of the recession, not while it was booming. The Fed could have cooled and contracted the bubble. |
Pop the bubble and cause a recession. At some point, you must have the recession. That is as true as when PK hated it in 2001 as it is when PK, Benny B and Larry Summers hate it now. The recession must go on. Any attempt to stimulate, be it with fiscal or monetary policy just puts off and builds up the pain.
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| With regards to 'marginal productivity of debt' I'm rather skeptical. |
Economic forecasting and research firms use this metric in their internal models. It is not for mass public consumption. Anyways, can you find the calculations for any quoted metric? Have you ever seen what these calculations look like? They can go on for pages and page and pages. In peer reviewed academic papers, sure. But in the NYTimes? Or FSN? I've never, for example, found the long-form GDP calculation outside of the classroom.
But be skeptical. Doesn't change anything. The stimulus is to replace private demand back to a time when private demand was future demand. The consumer economy is going to shrink to a level of production - servicing costs of debt - savings. That's easily 20% gone off of aggregate GDP. Unless you want permanent stimulus (as in Zimbabwe) the stimulus is a band-aid on multiple shotgun wounds. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Sat Jul 18, 2009 1:03 pm Post subject: |
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You stimulate a bubble to reduce the impact of a recession, then deflate it slowly, this is what the Fed failed to do. A recession is not necessary. Housing is only a part of the economy.
The fact is, I failed to find any reference to 'marginal prodcutivity of debt' on google except Fekete's article and a couple other posts. If it was at all accepted there'd be far more references to it. What about journal abstracts?
| Quote: |
| Economic forecasting and research firms use this metric in their internal models. |
Of course, but a national model?
Want me to try and find the long form GDP equation on the internet? I bet I can. As a 'trained economist' I would suggest you attempt to find the source material before relying on it. What's his calculation for the figure, why doesn't he provide it? Regardless, in a free-market economy it should tend towards 0 anyway.
The stimulus may well be a band-aid, but it should help in the short-term. Yes, citizens may pay 'more' in the long term, but it's better to 'spread the repayment' over a time, instead of going through a huge depression that'll kill (yes, kill) a % of the population.
I don't disagree that the U.S. and Britain is in for one hell of a beating before it's back to 'real', 'natural' economic levels. They've relied on trickerey to grow their economies and you can't cheat reality, but at least give the stimulus a chance before you write it off. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Jul 18, 2009 3:54 pm Post subject: |
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I'm indifferent to your opinion. I've stated mine. I'm not a proud or arrogant guy. If the stimulus works, I'll absolutely admit my fault. When you're wrong, I expect you to do the same.
Last edited by mises on Sun Jul 19, 2009 5:04 am; edited 1 time in total |
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pkang0202
Joined: 09 Mar 2007
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| Posted: Sat Jul 18, 2009 6:10 pm Post subject: |
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*AHEM*
I'd like to clarify that the stimulus was not just to jump start the economy. Don't forget the billions of dollars in there for programs that have NOTHING TO DO WITH THE ECONOMY. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Sat Jul 18, 2009 11:58 pm Post subject: |
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| I was making a logical case for why 'marginal productivity of debt' is not a reliable measure to see if the stimulus will work. From the lack of evidence/actual maths I can simply conclude I should follow far more prevalent and supported theories rather than this. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Sun Jul 19, 2009 2:00 am Post subject: |
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| Any discussion about whether stimulus will work is pointless. The fact is that the system is debt-based, and rotten to the core. It can't be sustained, and it can't be bailed out since the debt is built into the fractional reserve banking system run by the privately owned Fed. The only solution is to arrest the banker criminals and abolish the entire financial system as it stands today, and issue a new fiat currency without any interest attached. There is no avoiding the pain that will result, but it must happen or the banks will continue to engineer these collapses and panics, consolidating the wealth into their own hands, and bankrupting/enslaving the rest of us. |
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